Tag: high-end

South Africa’s recession means households had less and less to spend, but the number one supermarket group in the country, Shoprite, is adopting an unlikely strategy: targeting upmarket shoppers.

Lower-income families who formed Shoprite’s core customer base were cutting back on spending, but the wealthy remained undented by the economic downturn.

In a bid to retain its leading industry position, the discount retailer’s new boss was driving business hard into the higher-margin niche dominated by rival Woolworths.

The stage was set for a turf war to win the hearts, minds and wallets of South Africa’s richest two million households — and ultimately, pre-eminence in the supermarket sector.

Shoprite CEO Pieter Engelbrecht told Reuters that growth lied in affluent areas and customers.

“A lot of those (wealthier) customers, two million of them, actually frequent our stores already, but not exclusively,” he said in an interview.

“Our job is to get a better share of their wallets when they are in our stores and then impress them so that they come back again.”

Shoprite was doubling its offering of the kind of high-end convenience foods that Woolworths built its reputation on – from gourmet lamb shanks and oxtail stew to teriyaki-and-ginger basted pork ribs.

Its range would reach around 500 products by the end of this year, Engelbrecht said.

These products typically cost about R200 for a meal for four — 10 times the minimum wage of R20 an hour as set by new labour laws making their way through Parliament.

As part of the drive to expand its range, Engelbrecht said Shoprite had upgraded its food technology and development facilities, and gone on a hiring spree for food developers and technologists.

The company planned to open 23 new outlets of its higher-end Checkers chain of stores, mostly in wealthy suburbs such as Waterfall City north of Johannesburg.

New Checkers stores and established ones that had been refurbished resembled Woolworths outlets with sparse lighting and wood-panelled sections boasting extensive wine and gourmet coffee selections, as well as counters selling quality selections of cheese and meat.

‘I love Woolies’

But how will Woolworths defend a market that delivered handsome profits for the company?

When asked about Shoprite’s push into upmarket convenience food, Woolworths said that it had an “incredibly valuable emotional connection” with its customers.

“Retail is a dynamic environment and the competition in the grocery and food market category means that we will always keep a watching brief on our competitors’ activities,” it added.

“We conduct weekly basket checks against the prices of competitors to ensure that our prices are comparable.”

It was a tall order for Shoprite to break Woolworths’ stranglehold.

“They (Woolworths) have been good at introducing new products and other innovations in line with consumer trends and feedback,” said Old Mutual Invest food retail analyst Kaya Nodada.

If Shoprite was to prevail, it would have to win over shoppers like JF Fourie.

“I love Woolies. The microwave meals are a bit overpriced, but they are tasty,” the 28-year-old who works in marketing said in the Woolworths branch in eastern Pretoria as she added shimeji mushrooms to the baby brinjals in her basket.

Fourie – a big fan of Gordon Ramsay – said she would need some convincing about the quality of Shoprite’s products, but would give it a go because Checkers adverts feature the British celebrity chef.

“I like the chef and he hates airplane food,” she adds.

“He’s fussy and I am too.”

 

http://www.supermarket.co.za

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